Major shifts are coming to how employees finance their education and employers need to be ready. Federal legislation changes affect not only how employees borrow to fund their education, but also how employers should adapt education benefit programs to remain competitive, inclusive, and impactful.

In this on-demand webinar, Challenges Facing Employees Financing Education: What Employers Need to Know, EdAssist experts Stacey MacPhetres and Michelle Clifton decode complex policy changes, explore real-world implications, and share actionable strategies for the future of education financing. Here’s what you need to know.

Preparing for the changes in financing education

Over 1.8 trillion dollars in student loan debt hangs over U.S. workers. That burden is about to get heavier for some and more confusing for many.

Federal policy updates from the 2025 Tax Reconciliation Bill, also known as the One Big Beautiful Bill (OBBB), and related regulations are bringing significant changes in July 2026 in three key areas: tuition and workforce education, student loan borrowing, and student loan repayment.

What’s changing for tuition and workforce education?

For tuition and workforce education, here’s what’s changed under the OBBB and what employers need to know:

• The tax-free status for employer-provided tuition and student loan repayment assistance has been made permanent and it’s a game-changer for employee benefit planning.
• The $5,250 tax-free benefit cap (per employee, per year) will be indexed to inflation starting in 2027, making it easier to keep pace with rising education costs. This impacts both tuition assistance and student loan repayment.
• Pell Grants will cover short-term, non-degree training programs, meaning frontline workers and reskilling adults may have expanded access to funding if they qualify. This is a great opportunity for employees who didn’t think about using tuition assistance before, especially when paired with employer support.

These changes create more flexibility for employers to design equitable, future-focused education benefit programs that reach a broader employee population.

What’s changing for student loan borrowing

Student loan borrowing policies are also changing and here are the implications for employers:

• Undergraduate student borrowing is unchanged, but Parent PLUS loans are reduced. Parent PLUS loans will be capped at $20,000 per year and $65,000 total, reducing family borrowing abilities under federal loan programs. This has a strong impact on the sandwich generation, forcing parents to look at different funding opportunities for education.
• Loan amounts for part-time students will be prorated, limiting access for those balancing work and school. Most students who work full-time fall into this category. Now under the OBBB, employees attending school part-time can only borrow based on their enrolled hours, limiting their borrowing opportunity.
• Grad PLUS loans are eliminated, significantly reducing graduate students’ federal borrowing capacity. Without flexible borrowing options, more employees may be deterred from pursuing graduate school to further their education and skills.
• While Grad PLUS loans are eliminated, other available federal student loan amounts also have new limits. This is an area that has a lot of public concern, specifically around what’s considered a “professional” or “non-professional” program. New limits are set at $100,000 total for non-professional graduate programs, and $200,000 for professional programs.

These borrowing changes could create new access barriers for employees and their families, particularly in high-need fields like healthcare where employers are often trying to close skill gaps.

What’s changing for student loan repayment?

Aside from tuition and student loan borrowing, there are also changes coming for student loan repayment. This affects both existing borrowers and new borrowers needing to finance education. Here’s what employers need to know:

For existing student loan borrowers

For existing student loan borrowers, current federal Income-Driven Repayment (IDR) plans, Saving on Valuable Education (SAVE), Pay as You Earn (PAYE), and Income-Contingent Repayment) ICR, will be phased out by July 1, 2028.

These plans were based on income and family size and offered low payments, no interest accumulation, and 20-25 year forgiveness. With these changes to student loan repayment, existing borrowers will need to switch to a Repayment Assistance Plan (RAP). If they don’t qualify for a RAP, they’ll need to switch to a modified Income-Replacement Repayment (IBR) plan or a Standard Plan with fixed payments.

This is critical for employers because about 8 million borrowers will have to identify a new repayment plan, which is a high number of employees facing this confusing transition. Many may not be able to afford their payments.

For new student loan borrowers

For new student loan borrowers, any loans disbursed after July 1, 2026 will have two repayment plans available. If they qualify for a RAP plan, they’ll make monthly payments based on income starting at $10 per month. If not, they need to switch to a Standard Plan with fixed payments with repayment terms ranging from 10 to 25 years, based on total loan balance.

While designed to simplify repayment, these transitions are very confusing if your employees are repaying student loans. This is especially challenging for those navigating multiple loan types, forgiveness options like Public Service Loan Forgiveness (PSLF), and interest accrual changes.

Watch the on-demand webinar for more details about these changes.

What are the key impacts and opportunities for employers?

With so many changes ahead, employees need employer support for clarity, coaching, and financial support. This is even more critical when access to graduate education becomes harder because the supply of talent can shrink. Here’s what employers should be thinking about now.

Tuition and Workforce Education

• Permanent tax-free status for tuition and student loans provides more flexibility. Employers can reallocate benefits to reach more employees. For example, offer both student loan repayment and tuition assistance.
• Inflation-indexed $5,250 cap allows benefit limit to keep pace with rising education costs. Employers can modernize policies annually with predictable increases.
• Need-based Pell Grants for non-degree programs allows for more funding options for those who qualify. Employers can expand access to upskilling and frontline employees, providing more access and funding options for those who qualify.

  Student Loan Borrowing

• Grad PLUS eliminated reduces graduate student overall federal borrowing capacity. Employers can consider updating tuition programs because if you have employees needing graduate study to enhance their roles, they may take longer without financing options.
• Loan proration for part-time enrollment limits borrowing capacity. Employers can review their tuition programs for what roles or programs they offer because employees will rely more on employer benefits.
• Changing graduate borrowing limits for professional vs non-professional designation. Employers can provide coaching or support with their education benefits to help employees identify funding opportunities with lower graduate borrowing limits. This greatly reduces graduate student borrowing limits and open funding gaps for high-need roles.
• For dependent borrowing, Parent PLUS loan limits reduced to $20,000/year per student, $65,000 total. Employers can consider offering dependent borrowing as a benefit. This new reduced parent borrowing ability adds additional burden to families financing higher education.

  Employee Student Loan Repayment

• Repayment SAVE plan elimination and Introduction of repayment assistance plan (RAP) from 2026–2028. Employers can consider offering student loan coaching and support. These changes are creating a tremendous amount of confusion with student loans, the second greatest source of debt behind mortgages. With 1.833 trillion in U.S. student loan debt, employees are struggling with their loans and not saving towards retirement plans.
• SAVE forbearance ending putting millions in transition. Employers can provide clarity, reduce confusion, and support employee wellbeing with coaching and support.

Watch the on-demand webinar to learn more

What employers in the healthcare industry need to know

For employers in healthcare, the professional and non-professional definition changes may have an even bigger impact. High cost, high need fields like nursing (RN), physician assistants (PA), physical therapists (PT), and occupational therapists (OT) will face much tighter federal borrowing limits, potentially requiring employer tuition benefits, private loans, and program selection strategies (including part-time or lower-cost options).

While these changes seem discouraging, it’s important to note that the non-professional fields are still professional roles. They may require longer attendance to complete these changes to student borrowing. The good news, according to the Department of Education, is that many nursing programs, for example, do come under the new limits.

What employers should be aware of is that borrowing isn’t as accessible as it used to be, which will be noticeable when graduate programs in healthcare are in great demand and there’s a barrier to obtaining them. With limited borrowing available, this is an opportunity to consider how programs can be adjusted to fill those critical roles and talent pipeline in the future.

What are the key areas of focus for HR and benefits leaders?

Now that we’ve reviewed the key impacts and opportunities for employers from the changing legislation, the next step is for employers to evaluate their education benefit programs. Here are key considerations for employers to support learning pathways.

Modernize Education Benefits to Reflect New Realities

• Tax-free assistance provides opportunity to update tuition assistance programs to cover non-degree and short-term credential programs, especially for frontline employees with potential Pell Grant eligibility.
• Adjust graduate study policies in response to new loan limits and borrowing rules with professional and non-professional programs. Focus support on degrees aligned with organizational goals and future workforce needs.
• Plan for annual updates to benefit caps tied to inflation starting in 2027. This may require planning to keep pace with education costs.

Support Employees with Coaching and Tools

• Offer academic and financial coaching to help employees navigate borrowing changes, payment plans, and education choices. Confusion is at an all-time high and expert coaching delivers clarity and peace of mind.
• Use coaching to help employees maximize benefit use and make informed decisions, whether they're paying off student loans or preparing to upskill. Promoting available academic and financial coaching to support employees is a simple action with high ROI.

Leverage New Flexibility in Tax-Free Benefits

• With the permanent tax-free provision now including both tuition and loan repayment support, employers can combine benefits under a single umbrella. This creates more holistic support without added tax complexity.
• Employers using EdAssist can manage both programs within the combined cap to streamline delivery and communication.

Expand Support to Employees’ Families

• Dependent support through College Coach can help employees plan and finance dependent education, particularly as Parent PLUS loan caps tighten. As you think about adapting your program to best serve your employees, here’s another consideration.
• The newly introduced “Trump Accounts” will function like long-term savings accounts for dependents. Employers can contribute to these accounts to help families build future education savings.

3 Steps for Employers to Take Proactive Action Now

While there are a lot of legislative changes, a big takeaway is that employers don’t need to wait until July 2026 to adapt. Employers who make proactive adjustments ahead of the deadline will better support their employees and talent pipeline.

Here are three steps to take now:

1. Assess your current education assistance program. Does it reflect the needs of today’s learners and tomorrow’s leaders?
2. Educate your workforce. Employees are overwhelmed by these changes. Proactive communication and resources can build trust and reduce stress.
3. Partner with experts. Providers like EdAssist bring the tools, policy insights, and coaching resources you need to evolve your benefits with confidence.

With education costs rising and borrowing access narrowing, the role of the employer in education financing has never been more critical. By staying informed and adapting benefits to align with the new policy landscape, organizations can ensure continued access, equity, and workforce development in the years ahead.

Let EdAssist help you assess and enhance your tuition and loan repayment programs. Our experts are here to provide personalized guidance tailored to your goals and workforce needs.